In a contrarian’s position to many economists and academics, a real estate professor at the University of Colorado (the only one) says that the Colorado housing market is insulated against big price drops because there is no speculative bubble. [Denver Post]
Inflation, not speculation, can explain most of the gains in Colorado home prices the past decade, Thibodeau says.
“Colorado last enjoyed double-digit gains in sale prices of existing homes in 2000 and 2001. Since then, the state has lagged the rest of the country when it comes to real estate appreciation.”
Prices are rising because of rising construction costs and investors are putting more of their net worth into real estate, including 2nd homes and investment properties. More single people are buying homes and job creation is forecast to increase next year.
The postion here seems contradictory to facts simply because the argument of an increase in 2nd home and investment properties contains an element of speculation. In addition, Colorado home purchasers are heavy users of interest only mortgages, foreclosures are rising and payrolls are lower than they were in 2001.
In other words, this professor has not provided any arguments to refute existing issues other than the forecast for job creation. This is the typical momentum argument we see quite often, light on facts, heavy on confidence.
In otherwords, the forecast for Colorado remains up in the air.